B. Suresh Goud vs The Collector (Excise) Mahaboobnagar District

Chennakesav Reddy

The petitioner is the licensee of toddy shop of Toddy Tappers Cooperative Society, Yanmannarva village for the year 1978-79. The Circle Inspector of Excise (Enforcement), Nalgonda made a surprise inspection of the toddy shop at 4.40 p.m. on 2611-78. He tested the toddy exposed for sale with prescribed chemicals and found that it was adulterated with chloral hydrate. He therefore obtained samples of toddy from the said shop in accordance with the prescribed Rules and sent one sample to the Chemical Examiner, for analysis. Pending receipt of the report of the Chemical Examiner, the licencing authority viz., the Excise Superintendent, Mahbubnagar district suspended the licence of the said shop on 18-12-78 u/s 31 (1) (b) of the A.P. Excise Act (hereinafter referred to as the Act) on the basis of the test conducted by the Circle Inspector of Excise (Enforcement) on 20-11-78 and his opinion that the toddy found in the shop for sate was adultered. Suspension orders were served on the licensee on 21-12-1978. Subsequently the Chemical Examiner opined that the sample of toddy sent to him for analyars by the Circle Inspector of Excise (Enforcement) Nalgonda on 26-11-78 was not found to be adulterated with Chloral-hydrate by his report dated 18-12-78. Therefore on 15-1-79 the order of suspension of the Excise Superintendent, Mahbubnagar dated 18-12-78, was revoked. On 21-1-79 the petitioner was served a notice informing him that he bad failed to pay the rental of Rs. 3,020/- for the shop for January 1979 and asking him to show cause by 31-1-79 as to why the licences of the shop should not be suspended. The petitioner in his reply dated 5-2-1979 stated that the suspension of the licence of his shop on 18-12-78 was wholly unjustified as it was pointed by the Chemical Examiner that the sample of toddy taken from his shop was not adultereated, that the shop was re-opened after revocation of the order of suspension on 15-1-79 and that the Government was entitled to demand rental for January 1979. It was also stated that u/s 31 (3) of the Act he cannot claim any compensation or refund of any fee paid for the period of cancellation or suspension of the licence but that the Government have no right to demand the rental for the period of wrongful suspension of the licence. Since the Excise superintendent persisted in the demand for rental for January 1979 the petitioner filed this writ petition seeking a writ of certiorari to quash the demand notice dated 21-1-1979 demanding rental for the month of January 1979 in respect of the toddy shop. In the counter affidavit filed by the Excise Superintendent, Manboobnagar, the demand is justified u/s 31 (3) of the Act read with Rule 42 of the A. P. (Arrack and Toddy Licences General Conditions) Rules, 1969 (hereinafter referred to as the General Conditions Rules).

The simple question and the only question that arises in this case is whether the State Government have the legal right to demand rental for a toddy shop for a period curing which the licence was wrongfully suspended and the licencee was prevented from carrying on his business. Protection for the demand is taken under the provisions of Section 31 (3) of the Act and Rule 42 of the General Conditions Rules. Section 31 (3) of the Act Reads :

The holder of a licence or permit shall not be entitled to any compensation for its cancellation or suspensation nor to the refund of any lee paid or deposit made in respect thereof.

Rule 42 of the General Conditions Rules reads :

Where a licence is withdrawn or a shop is ordered to be closed by or under the provisions of the Act, otherwise than by cancellation of suspension, no demand of rental for the period during which it was withdrawn of closed, as the case tray be, may be made. But the licencesee shall have no right to claim any compensation on that account, except to the refund of the proportionate licence fee and the deposit if any.

It would be useful not to the definitions of licencesee and rental in clauses (3) (c) and (d) of the General Conditions "3 (c) Licensee means a person to whom licence to sell arrack or toddy has been granted under the Act".

(d) ''rental'' means the rent payable in respect of a shop or group of shops, in consideration of the grant of lease for sale of toddy or arrack.

Section 31 (3) of the Act only bars a licence or a permit-holder from claiming any compensation for the cancellation or suspension of licence or to the refund of any fee or deposit made in respect thereof. Therefore this sub-section does not authorise the Government to demand any rental or fee for the period for which the licence was suspended or cancelled wrongfully ; nor does Rule 42 of the General Conditions and Rules empower the Government to make such a demand. This rule only provides that when a licence is withdrawn or the shop is ordered to be closed by or under the provisions of the Act except by way of cancellation or suspension to demand of rental for the period during which it was withdrawn or closed, as the case may be, may be made. Even this Rule does not provide that a demand of the rental for the period of suspension or cancellation found to be invalid or unlawful, can be made. It is well to remember that it is a legal right protected by law that gives right to a legal duty. Neither section 31 (3) of the Act nor Rule 42 of the General Conditions Rules clothe the Government with any legal right to demand rental in respect of a shop for the period during which the licence remained illegally and wrongfully suspended or cancelled. Salmond on Jurisprudence, Twelfth Edition contains the following passage at Page 218:

Right like wrongs and duties, are either moral or legal. A moral or natural right is an interest recognised and protected by a rule of morality, an interest the violation of which would be a moral wrong, and respect for which is a moral duty. A legal right, on the other hand, is an interest, recognised and protected by a rule of law, an interest the violation of which would be a legal wrong done to him whose interest it is, and respect for which is a legal duty.

Mr. Justice Mukherji in his book "The New Jurisprudence" says at page 7 as follows: To-day in modem jurisprudence rights are saddled with responsibilities and obligations which the older jurisprudence did not emphasise or even recognise. According to Professor Hart''s way of thinking "right" postulates the conditions that (1) there is in existence of a legal system (2) under "rule or rules" of that system, someone else is obliged to do or abstain for some action, (3) this obligation is made by law dependent upon a choice which is mutually reacting between the one who asserts the right and the one who is obliged and (4) that it is ultimately a conclusion of law in a particular case which falls under such rules.

The licences is only obliged to pay the rental as long as the assertion of the right by the authorities rental is lawful. The definition of rental itself in clause (3) (d) of the General Conditions Rules defines "rental" as rent payable in respect of a shop or group of shops, in consideration of the grant of lease for sale of toddy or arrack. When the lease for sale of toddy or arrack is found to be suspended arbitrarily or unlawfully there cannot be any obligation on the part of the licencee to pay the rental. It would be profitable by way of an analogy to notice Rule 54 (2) of the Fundamental Rules of the Andhra Pradesh Government, which provides that a Government servant in the case of unjustified suspension shall be given full pay and allowances to which he would have been entitled bad he not been suspended. Conversely when a suspension of licence is unjustified, he ought not to be saddled with the liability to pay the rent for the said unjustified period of suspension. Therefore the State Government has no legal right to demand the rental for the period of unlawful suspension for which the licencee is not liable. It follows that the demand for rental for the entire month of January inclusive of the period of suspension i. e., 1st to 15th is illegal. The impugned notice of demand is accordingly quashed and the respondent is directed not to demand the rental of the shop for the period from 1st to 15th January, 1979. The Writ Petition is partly allowed.